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The Myth of the “Ownership Society”

"No," said former Fox News journalist Tony Snow, newly appointed as one of George W. Bush’s closest aides, his Press Secretary, when asked recently about his retirement savings. “As a matter of fact, I was even too dopey to get in on a 401(k). So there is actually no Fox pension. The only media pension I have is through AFTRA.”

A 401(k) is a heavily tax-favored account in which workers can save money for their retirement. Typically, employers – including Fox News – match workers’ 401(k) contributions, so setting up a 401(k) is an irresistible financial deal, a true no-brainer. Yet Tony Snow didn’t. Only the union he was forced to join, the American Federation of Television and Radio Artists, has been doing any formal saving and earmarking of his retirement assets.

Snow’s case, I think, holds very important lessons, and not just for the United States. To the extent that the Bush administration has a coherent philosophy for domestic policy, it is the idea of the “ownership society” – the belief that intermediary institutions, whether governments, unions, or the benefits departments of companies, should get out of the business of providing social insurance. Instead, individuals should rely on their own assets to provide them with financial security in retirement or in case of serious illness. Give people the incentives to plan for their future, ownership-society advocates argue, and they will.

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J. Bradford DeLong is Professor of Economics at the University of California at Berkeley and a research associate at the National Bureau of Economic Research. He was Deputy Assistant US Treasury Secretary during the Clinton Administration, where he was heavily involved in budget and trade negotiations. His role in designing the bailout of Mexico during the 1994 peso crisis placed him at the forefront of Latin America’s transformation into a region of open economies, and cemented his stature as a leading voice in economic-policy debates.

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